Secret of success is mind your own business, research reveals 02 February 2012
What is the secret of success for small firms? Is it customer service, good marketing, staff selection or innovation?
Entrepreneurs and academics regularly try to answer this question and come up with differing conclusions. However according to new research by Martie-Louise Verreynne, a small firms expert at UQ Business School, the answer is closely related to how you measure success.
Martie-Louise surveyed 2,100 Australian firms and analysed the words used by CEOs to describe success. She found that ‘lifestyle firms’ – those which exist to provide a reasonable living for their owners and have no growth aspirations – have a very different view of success from high-growth firms.
The former view success as the ability to satisfy customers, make a profit and repay the initial investment, and placed a high value on family, lifestyle, happiness, and retirement provision. Meanwhile high-growth businesses focus more on the firm and its stakeholders rather than the personal circumstances of the CEO. Their measure of success included profitability, customer satisfaction, employee happiness, shareholder goals, product or service quality and growth.
The survey is part of an international study on small firm growth with partner organisations in Cambridge, UK and Auckland, New Zealand. Martie-Louise is leading the Australian part of the survey.
She stresses that, although little attention is paid to them, lifestyle businesses account for a significant proportion of Australia’s 11 million workforce and are important to the economy. The Australian Bureau of Statistics estimates that in June 2009, there were 1.2 million with no employees, and 500,000 employing one to four staff.
As the different types of firms have different aspirations, so the methods used to achieve success must be tailored to their needs. However both types of firms agree that success is more than just making money.
Martie-Louise explains: “Henry Ford once said that a business that only makes a profit is a poor business. The results reported here reinforce this. Success rests in the ability to work out what is important to your business, and then take the necessary steps to attain it.
“Whether it is by maintaining a lifestyle and providing self-employment, or growing a business for future generations, having a clear vision of the future and linking it with the appropriate actions are key.” For further information see http://theconversation.com/the-secret-to-running-a-successful-small-firm-mind-your-own-business-4917.